STC Indonesian unit eyes $300m tower sale

Jakarta, December 14, 2012

PT Axis Telekom Indonesia, controlled by Saudi Telecom Company, is planning to sell 1,600 telecommunication towers worth around $300 million, three sources with direct knowledge to matter said on Friday.

Asian telecommunication firms from India to Indonesia are selling their towers and other infrastructure assets to raise cash to pay down debt or fund their expansion plans.

The Indonesian unit of the Gulf's No.1 telecommunications operator is in talks with PT Tower Bersama Infrastructure and PT Sarana Menara Nusantara, which are bidding for the towers, the sources said.

"The discussions are ongoing and it is expected the transaction will be completed by the first half of next year," said one of the sources with the knowledge of the plan, who declined to be identified because the talks were not public.

The sources said proceeds from the sale will be used for debt refinancing and investment.

Officials with Axis Telekom and Sarana Menara were not available for comment, while Tower Bersama officials declined to comment.

Axis was launched in 2008 and has 16 million phone and Internet subscribers, making it a relatively small player compared to PT Telkomsel, a unit of Indonesia's biggest mobile operator, PT Telekomunikasi Indonesia, which has 110 million customers.

The deal would be the second major tower sale in Indonesia after the nation's second-biggest mobile phone provider, PT Indosat, sold 2,500 towers for $406 million to Tower Bersama this year.

The latest deal, if finalised, will make either Tower Bersama or Sarana Menara as the country's biggest independent tower operator.

The Indonesian government issued a regulation in 2010 to restrict foreign ownership of tower companies to protect local businesses, although the tower industry needs up to $8 billion in capital expenditures annually.

However, US private Equity Carlyle Group was able to buy a near 25 per cent stake in tower provider PT Solusi Tunas Pratama for about $100 million this year, structuring the deal in such a way that it complied with the new rules.

Solusi Tunas previously bid for Indosat's towers but lost to Tower Bersama.

Tower Bersama is controlled by Indonesia-based private equity firm Saratoga Capital, which was founded by Edwin Soeryadjaya and Sandiaga Uno, while Sarana Menara controlled by Indonesia's wealthiest conglomerate, Djarum Group.-Reuters